The Evolution of Online Payments

From Barter to Cashless

Explore the transformative journey from ancient barter to modern cashless transactions. Uncover the history of payment methods and the UAE's pivotal role in the digital payment revolution.
January 29, 2024
|
Gautham Gopakumaran
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5 min read

Like it or not, money is a crucial part of our life. It allows us to buy things that let us live a comfortable and decent life. However, money has been in existence in some form or another for just about 5000 years. 

Before that time, there was a barter system that ancient people used to trade. Slowly, as humankind evolved, money evolved, too. 

From printing the first currency note to cashless transactions and bitcoins, needless to say, technological advancements have revolutionized payment methods. 

We’re here to take a step back and deep dive into understanding the evolution of online payments.

The Barter System: Trade in Ancient Times

Long before money was invented, ancient people used a barter system to exchange goods and services. This oldest form of commerce, which was practiced for centuries, involved two individuals negotiating their goods or services before they exchanged them in the form of trade. 

For example, a farmer may exchange his crops for a cow or salt. The quantity of rice to exchange used to depend on the perceived value of salt or cattle. 

It is believed that the first barter system was introduced by the Mesopotamians all the way back to 6000 BC. Later, it was adopted by the Phoenicians, who used it to barter goods with others across the oceans. 

With the rise of the Babylonians came a further improved bartering system when goods were exchanged for food, tea, weapons, and spices. 

Salt was another common and expensive merchandise that was exchanged. In fact, the Roman soldiers were paid their salaries with salt. 

In the Middle Ages, Europeans who traveled around the world started to barter crafts and furs in exchange for silk and perfume. 

Musket balls, deer skins, and wheat were some of the common barter items used by the colonial Americans. 

However, the barter system had its own limitations, too. 

The most common problem with the barter system was its inefficiency. 

For example, if a farmer wanted to exchange his rice for timber, he had to find someone who would have timber and wanted to exchange it for rice. The other problem was ensuring a fair exchange because the perceived value of goods and services varied.

The Introduction of Currency: Simplifying Trade

As we discussed, primitive societies used the barter system to exchange goods and services. Some ancient tribes also bartered goods in exchange for shells. However, the barter system had its own pitfalls, which slowly led to the invention of metal coins. 

The development of metal coins is estimated to date back to 700 to 500 BCE. Since the coins were standardized, trading became easy. The invention of gold and silver coins also made trade easy and convenient between countries. A country that had a surplus of any item could easily sell it to another country in exchange for coins.

The transition to paper notes happened in 1260 CE when the Yuan Dynasty of China switched to paper currency from coins. However, some parts of Europe continued to use metal coins until the 16th century. 

Introduction of banks

Later, once the banks became functional, they started to replace the coins using paper notes. People could take these notes to the bank to exchange for gold, silver, or coins. The paper money made it easy for everyone to buy goods and services.  

The shift to paper money simplified international trade. It enabled the movement of goods from one country to another, migration, and settlement, and created socioeconomic distinctions. 

The Advent of Electronic Payments

Although one may assume that electronic payment methods like credit and debit cards are modern payment methods, the earliest history of credit cards dates back to 5000 years ago in ancient Mesopotamia. Inscriptions bearing mutual agreements on clay tablets were used when people wanted to buy at the moment and pay later. 

Fast forward to modern times, and those ancient clay tablets paved the way for store cards when merchants issued cards to farmers as a receipt of loans. The farmers who didn't have money to pay upfront used to pay later once crops were harvested. 

In 1950, the Diner's Club became the most popular and widely accepted form of credit card when its founder left his wallet at home while out dining. Diner's Club users would charge their meals to the card, and the restaurant would send the bill directly to the Diner's Club. The cardholders had to pay the bill to the Diner's Club at the end of the month. 

In 1958, American Express, originally a freight company, came up with its first credit card that allowed its customers to pay bills via the credit card. 

In 1966, the first interbank card was released when a group of California-based banks came together into a partnership. This card eventually evolved into the present-day MasterCard in 1979.

Credit cards got a new dimension with the advancement of technology. In the 1960s, an IBM engineer affixed magnetic tape on the back of the card so that the user got the updates when their cards were swiped at a point-of-sale. 

The popularity of credit cards saw some marked differences in buyer behavior. Different research studies have proved that credit cards increase the pleasure of buying, and users are willing to pay higher prices when given a chance to pay through credit cards. 

One hypothesis suggests that since credit cards reduce the "pain" of payment, they remove the holds on expenditure. A neural mechanism study associated with credit card purchases showed that a strong activation at the striatum occurs on the onset of credit card cue. 

The Digital Revolution: Birth of Online Payments

Online payment is an irreplaceable part of our modern lifestyle. The origin of online payment can be traced back to 1871 when Western Union introduced online money transfer in the US.

For the first time, people could pay for goods without being physically present for the transaction. However, the online payment mode saw rapid growth only after 1960 when the US Advanced Research Projects Agency Network laid the foundation of the modern-day internet.

Since then, the online payment landscape has rapidly evolved. 

Key Milestones

In 1994, the Stanford Federal Credit Union became the first financial institution in North America to launch its online banking service for its customers. 

As the banking industry saw the digital transformation, more financial corporations started embracing this journey. 

In the late 90s, PayPal entered the market and became the first global payment service provider.

Starting from the early 2000s, different companies across Asia started adopting the online payment mode. 

The UAE's banking sector has been at the forefront of digital transformation. Banks like Emirates NBD and Abu Dhabi Commercial Bank have pioneered online banking services, significantly enhancing customer convenience and transaction efficiency in the region.

Alibaba was established in 1999 as the first ecommerce platform in China. 

The next in line was the rise of digital wallets, which came into existence in 2011 when Google Wallet was launched ( Now known as Google Pay).

Today, most digital wallets are powered by cloud technology that offers inbuilt security and on-demand scalability and comes with intense processing features.

As the global landscape shifted towards electronic and online payments, the UAE too made significant strides in embracing digital technology. The introduction of real-time payment systems in the UAE, as part of a broader Middle Eastern strategy, signifies a pivotal move towards digital adoption. 

Notably, initiatives like the GCC RTGS (Real Time Gross Settlement System) and the Arab Regional Payment System (BUNA) have been instrumental in standardizing and enhancing payment efficiency across the Gulf and Arab regions. 

These efforts reflect the UAE's commitment to modernizing its payment infrastructure, aligning with global trends while catering to regional needs.

The Rise of Mobile Payments and E-Wallets

As online payments and digital wallets gained prominence, we saw a sharp rise in mobile payments and e-wallets. As smartphones became affordable and accessible to all, mobile payments saw rapid adoption among the population. 

With e-wallets, carrying cash becomes unnecessary as your money is safely stored on your smartphone. Moreover, with mobile payment, you don't need to look around for ATMs to withdraw money— you can make a payment as long as you have a smartphone and internet connectivity. 

Consumer behavior also witnessed a stark difference with the change in technology. Businesses started to offer payment in digital mode to improve the customer experience, while the convenience of digital wallets paved the way for more online stores, the COVID-19 pandemic forced businesses to further adopt cashless and touchless payment modes. 

Consumers today prefer to shop from the convenience of their homes with just a few clicks. As predictions say, 21.2% of total retail sales will happen online by 2024. 

Reflecting global trends, the UAE has seen a surge in mobile payments and e-wallet adoption. Driven by a tech-savvy population and initiatives like Dubai's Smart City project, mobile payments have become a staple in the region's bustling commerce.

The Emergence of Cryptocurrencies and Blockchain

While digital wallets and online payment have now stayed for many years and continue to offer a safe and convenient mode of transaction, the development of new technology is making way for new payment options. Bitcoins and cryptocurrency are emerging as powerful financial currencies that merchants can transfer between one another without the involvement of banks. Such a decentralized transaction mode has both its pros and cons. Some of these include:

Advantage of cryptocurrency 

Since no banks or intermediaries are involved, it eliminates the possibility of a single point of failure.

Decentralized transactions are secured by public and private keys, along with different incentive systems.

Cryptocurrency transfer is faster than traditional systems as no intermediaries are involved.

Cryptocurrency investment can earn you profit as the market grows. It’s valued at USD 680 billion as of November 2023. 

Disadvantage of cryptocurrency

Though cryptocurrency claims to be an anonymous form of transaction, certain agencies like the FBI can follow the digital trail.

Cryptocurrency is often used for malpractices. For example, hackers prefer cryptocurrency for ransomware. 

Although its transaction is decentralized, in reality, the ownership is highly concentrated. There are roughly 100 addresses that circulate 15% of the total value of Bitcoin. 

The Future of Payments: Towards a Cashless Society

If we look back to the history of the evolution of online payments, it’s only logical to predict that we’re slowly heading toward a cashless society. Although it might take some time to become completely cashless, it’s a fact that we’re slowly progressing toward becoming a cashless society. As technologies like AI, biometrics, and contactless transactions evolve along with the changing customer behavior, a cashless society is what looks the most logical next step. 

While we still can't predict where we will be in 2030 or 2060 in terms of cash, near-term projection sees a continuous decline in cash transactions. Cash projection in North America is only 8.7% by 2024. 

So, coming to the most pertaining question, if we are going to be a cashless society — the answer is a yes and a no. While many countries are heading fast towards embracing a cashless society, some countries will still be using cash transactions at least for the next few years. 

Conclusion

From barter systems to modern-day bitcoins, payment methods have been evolving steadily with the evolution of mankind. As new technology has come into existence, it has added new payment methods to the system, which has greatly influenced buyer behavior. 

The buyer who once couldn’t think of going out of the house without carrying their wallet can now comfortably go out with their smartphone, do shopping, and pay bills for their dinner. 

While we are steadily heading towards a cashless society, only time and technology will define what's in store for the future of payment and if we will ever become a completely cashless society.

Ready to track and record transactions more efficiently?

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7 Top Benefits Of Using Digital Payment Systems For Small Businesses

Gautham Gopakumaran
|
5 min read
April 2, 2024
|
Digital payments, Small businesses

Dreaming big and running into a cash flow crunch is not ideal for a small business. 

Still, 82% of small businesses that go out of business mention cash flow as the main reason. 

Keeping track of your incoming and outgoing money will help you build a sustainable and profitable business in the long run. 

With proper cash flow management, you can hire people, buy raw materials, invest money in your business, and still pay your bills and make a profit. 

But it's easier said than done, especially if you manage things the old way in sheets.

Some small businesses also use bookkeeping software to track their cash flow. 

Although it's better than managing cash flow in sheets, it often fails to keep track, especially when customer transactions are increasing and your business is growing. 

Then what’s the solution?

The short answer is digital payment systems.

In this article, we’ll discuss what it is and how your business can benefit from using it. 

But before that, let’s quickly understand what a digital payment system is. 

Recap: What is a digital payment system?

A digital payment system, also known as the electronic payment system, allows businesses and individuals to transact through electronic devices like smartphones or computers.

Digital payment systems have become super popular over the years because of their convenience, security, and efficiency. 

Smart payment solutions like Payby enable you to integrate a digital payment system for your business. 

So, whether your customer prefers to pay via a QR code, mobile wallet, or more traditional credit/debit card, you have it all on your checkout page.  

What are the benefits of using a digital payment system? 

The digital payment system has multiple benefits for small businesses. These are:

1. It’s convenient 

Digital payment systems are convenient and, hence, widely preferred by customers.

In the UAE, 88% of consumers mentioned that they have used at least one emerging digital payment method, as Mastercard mentions in one of their surveys. 

The same report mentions that consumers are turning towards digital finance options for their everyday needs because of their speed, convenience, and transparency. 

Moreover, a digital payment system can securely store a customer’s preferred payment options and card details, which means repeat customers don't have to enter the same information again. 

Offering such convenience to customers boosts repeat sales for your business. 

Recommended read: How do payment gateways impact user experience

2. Improves cash flow management

Digital transactions also help small businesses manage their cash flow effectively, enabling you to keep track of the inflow and outflow of funds. 

The transaction history gives you insight into spending trends, cash management, and sales. 

This insight can help you more accurately predict future income and expenses. 

As a business owner, you don't need to wait for checks to clear. You can receive instant payments for products/ services sold. 

Many digital payment systems integrate with accounting software, recording all incoming and outgoing transactions. 

This streamlines the reconciliation process and provides real-time visibility into your cash flow, enabling you to make informed decisions at the right time. 

Moreover, by automating the whole process, you remove the scope of manual error that would have happened if you were keeping track of the cash flow manually. 

3. Enhanced security

Digital payment systems are secured and reduce the risk of fraud as every transaction can be tracked in real-time.

With the help of secure gateways, you can enhance the security of every transaction. 

You can also safeguard customers' sensitive personal data and banking information through advanced security measures. 

With features like data encryption and fraud protection, tokenization of websites, and biometric payment methods, consumers' sensitive information can be kept safe.

For example, PayBy, which enables business growth with cashless payments, is trusted by some of the leading brands in the UAE. 

The brand is also licensed by The Central Bank of the UAE, which helps them earn trust and a good reputation.

It has been given the highest levels of financial service approvals to conduct Stored Value Facility (SVF) and Retail Payment Services (RPS) operations. 

Recommended read: Cybersecurity in digital payments

4. Broader customer base access

Digital payments allow small businesses to increase their customer base. 

With digital payment solutions, small businesses can offer their products/services to non-local customers and all those who prefer online shopping. 

Anyone with internet access can visit your website and make a purchase. 

Digital payments like Payby also empower you to run subscription-based businesses. 

You can simply integrate gateways with your existing website so you can host the payment page and customize it according to your needs. 

Plus, multiple payment options encourage customers worldwide to view and purchase from your website. 

5. Data and insights for better decision-making

Digital payment solutions generate tons of data that can give you a lot of insights.

For example, look into the transaction history to understand what time your sales peak, what are the most preferred payment methods, which is your most selling product, the purchase behavior of the customers, spending trends over the years, and where your funds are used most. 

Scrutinize these data, and you will be able to make a better business strategy that's backed by data. 

6. Shop on the go

The biggest benefit of a digital payment system is that it enables you to do a transaction anytime and anywhere. 

It’s instant, and there’s never a delay due to a nearby ATM running out of cash or you need to wait for a long time in the queue. 

You can continue to do business as usual, even if there's a holiday or a time zone difference for cross-country transactions.

7. Reduce transaction cost

Paper-based payments are a hassle for small business owners and suppliers. 

Besides the hassle, the entire transaction process is slow. 

The entire process of collecting and processing a paper check may take almost two weeks. 

Additionally, collecting and processing paper checks is a costly affair. 

Data says it costs almost $13 to send an invoice and $5 to process a single invoice check. 

Digital payments are easy, hassle-free, fast, and less expensive for businesses. Plus, it’s environmentally friendly too!

Ready to transition to a digital payment system?

If you’re a small business owner, implementing a digital payment solution can be really beneficial to grow your business. 

Payby offers various payment solutions that are perfect for small businesses to scale their business. 

Whether you want to set up QR code payments, payment gateway, virtual accounts, wallets, or recurring payments and auto-debits, Payby has got you covered. 

It also offers the lowest transaction/ payment processing rates, which means you have more control over the revenue you get from each sale. 

Ready to explore?

Get started with Payby today.

How to Improve Payment Processing User Experience

Gautham Gopakumaran
|
5 min read
April 1, 2024
|
Digital payments, Customer experience

As the world embraces a digital future, user experience remains the make-or-break moment for online payments. 

A poorly designed payment process is frustrating for the customer and can cause a big headache when completing the payment process. 

Result

You miss out on sales no matter how good a deal or the product/ service is. 

As data says, 88% of online consumers are less likely to return to a site after a bad user experience. 

On the flip side, a well-crafted payment processing system builds customer trust. 

This not only helps to close the transaction but increases your repeat sales.

As data says, companies see $100 ROI per $1 investment in user experience.

In this article, we’ll see how to improve user experience in payment processing. 

But before that, here is a quick recap to understand why you should be concerned about the payment processing user experience. 

Why is a good payment processing user experience important? 

A good payment processing user experience not just delights a customer but also sets the foundation for customer loyalty. 

As a result, you will see a boost in your repeat sales. 

Additionally, satisfied customers will always talk about their experience with acquaintances. 

And, any brand will admit that word-of-mouth marketing is the best marketing option any day.

Clarity and transparency

 A well-designed payment processing system instills trust through transparency. 

Offering clarity in payment processing means customers are aware of all the payment options available so that they can choose their preferred payment option. 

Additionally, maintaining transparency gives them a clear picture of the total cost of the product/service, taxes, delivery cost ( if any), or any other additional cost. 

Ensure that all the payment-related information is presented in a clear and straightforward manner. 

Convenience and speed

Today, customers are tech-savvy and prefer speed and convenience. 

Having a payment processing system that’s quick and convenient boosts the overall customer experience. 

On the other hand, a slow and floppy payment processing system turns off the customer and drives them away. 

Security

While digital payment is convenient and faster, it also comes with security concerns. 

Customers want to feel confident that the transaction process is genuine and that their sensitive personal data is handled carefully. 

Designing a payment process with PCI-level compliance is a must for businesses that ensure the highest customer security standards. 

Responsiveness

Customers value payment processing systems that demonstrate responsiveness. 

Sites that quickly resolve payment issues, disputed transactions, and 24/7 support are always preferred over transaction systems that are slow and unresponsive. 

Mobile optimization

Mobile transactions are extremely popular in the UAE.

As a survey suggests, 94% of the customers in the UAE used at least one digital feature during their last purchase.

The same survey suggests that 43% of the users suggested that an easy checkout experience is one of the reasons for online shopping. 

So, focus on mobile optimization and responsive UX designs that offer mobile users the same convenience and efficiency as desktop users.

Now, let’s understand how you can improve the payment processing experience. 

Ways to improve payment processing experience 

While each business is different and their needs vary, here are a few ways many businesses have improved their payment processing experience, and you can do too. 

Simplifying the Checkout Process

A simplified checkout process helps customers complete the transaction and creates a better customer experience. 

Customers who have a positive experience during the checkout process are more likely to return for future purchases. 

Here are a few things that you can do to streamline the checkout process.

  • Minimize the number of steps by offering guest checkout.
  • Filling out unnecessary details like birthdays and anniversaries is time-consuming and often quickly turns buyers off. Instead, gather only the necessary data that are compulsory to complete the payment.
  • Provide clear instructions for each step so there’s no confusion.
  • Use trust signals like a secure payment logo.
  • Offer one-click payments for quick transactions.
  • Keep the checkout process to a single page. Scrolling from page to page can distract a customer, causing a loss in sales. Further, it will also factor in if there are any internet issues. 

Optimizing for Mobile

Optimize your payment processing system for mobile users. A few things to consider:

  • Pay attention to responsive design that can adapt to any screen size.
  • Offer in-app payments by integrating the payment gateway into the app for a quicker payment experience instead of directing the customer to the website payment page, which may disrupt the payment flow.
  • One of the biggest inconveniences for buyers is signing up and providing login details before they can checkout. So, keep that in mind. 
  • Look for a payment gateway that offers QR code payment, mobile wallets, or displays the bank account details where you can asynchronously process the payment without logging in.

Enhancing Payment Security

Consumers need to be comfortable doing a transaction on your website. 

For this, they must ensure that your payment processing system is secure. Things that you can do:

  • You must comply with PCI DSS regulations. If you adhere to this guideline, convey this information to the consumer. That way, they’ll be assured that your system protects credit/debit card details by utilizing tokenization and multifactor authentication. 
  • Display the PCI DSS logo on your checkout page to show customers you care about their data safety. 

Offering Multiple Payment Options

Choose payment gateways that allow users to choose from diverse payment modes. 

  • While multiple payment modes are available to integrate into your website, some popular methods include credit/debit cards, mobile wallets, UPI payments, etc. 
  • Solutions like PayBy can enable cashless transactions and online payments via various international and domestic credit cards, debit cards, and over 1.5 billion wallets.
  • It easily integrates with your existing website, so you can host the payment page and customize it according to your needs. 

Improving Payment Gateway Speed

The speed and efficiency of the payment gateway can be a game-changer for your business. 

Here are some ways to improve the payment gateway speed:

  • Streamline the checkout process with minimal steps. 
  • Partner with a third-party payment processing platform that can handle multiple transactions at once. 

Providing Clear Error Messages 

After completing each transaction, send a clear communication to the customer so that they know their payment has gone through.

But if there is a transaction failure, ensure to communicate it as well. 

Few things to consider:

  • If there’s an error from the issuing bank, have the customer check the card details. If the problem persists, have the customer contact the issuing bank. 
  • Meanwhile, you can prompt the customer to use another payment option to complete the transaction.
  • If there are technical issues with the payment gateway, inform the customer immediately with a clear message, along with the details of the transaction if it has already been initiated. For example, your message may read, “Any deducted funds will be credited back to the original source in 48 hours.” 

Personalizing the Payment Experience 

Personalization is a clear winner in today’s hyper-competitive market. 

So why not bring it into your payment processing system to WOW your customers? 

Here are a few things to consider:

  • Make your customers feel valued by showing them their preferred payment options.
  • Use localization and customization features to offer your payment process in different regional languages, currencies, and markets. 
  • Combine each transaction with a loyalty or reward program to recognize repeat customers while up-selling and cross-selling your products. 
  • Once the transaction is completed, direct your customers to a thank you page to offer your gratitude. 

Continually measure and improve 

Once you have implemented the payment processing system successfully, remember to measure and track its performance continually. 

Tons of data are produced whenever a purchase is made—for example, the products purchased, when the product was sold, what payment method was used, and so on. 

Analyzing this information through a payment analytics lens can help you make a lot of data-driven decisions.

For example, whether your existing payment processing system is working or needs improvement, whether your customer is new or repeat, what their purchasing habits are, whether you need to expand on certain product offerings, and so on.

Some of the metrics that you can measure:

  • Payment types and methods to understand customer preferences.
  • Chargeback rates so that you can reduce any unnecessary chargeback rates and improve customer experience.
  • Transaction volume and velocity to understand your peak sales time.
  • Transaction amounts and values to understand how much people are spending and how you can improve that.

Time to improve your payment processing user experience

If you’re ready to improve your payment processing user experience, it’s time to partner with a payment solution that builds solutions with user-first intent and does not compromise on business needs. 

Payby enables business growth with cashless payments so that you can increase your revenue while prioritizing customer experience. 

Payby offers complete online payment solutions for businesses across all industries. 

Solutions range from payment gateways and QR code payments to virtual accounts, mobile wallets, recurring payments, and more. 

Ready to explore more?

Get started here. 

The Role of Digital Payments in Enhancing Customer Loyalty

Gautham Gopakumaran
|
5 min read
March 26, 2024
|
Digital payments, Customer loyalty

Digital payments have been around for over a decade, but the pandemic has catalyzed its adoption across countries and virtually all categories. 

As McKinsey reports in a 2023 survey, for the first time, more than nine out of ten consumers mentioned that they had used some form of digital payment during the year. 

The scene is no different in the UAE region. 

Statista mentions that the total transaction value in the digital payments market is projected to reach US$29.75bn in 2024.

Digital payments have been gaining popularity and quick adoption as a convenient and secure way of transacting. 

They’re fast, hassle-free, and can be done on the go. 

But have you ever thought digital payments can also help you build loyalty? 

In this article, we will discuss how you can leverage digital payments to enhance your customer loyalty. 

But before that, let's do a quick recap to understand why digital payments are getting so popular. 

Why is the demand for digital payments increasing? 

There’s not one but multiple reasons behind the growing appetite for digital payments: 

1. Convenience

As customers are becoming more tech-savvy, they prefer quick solutions and convenience. 

Digital payments offer convenience as a digital transaction doesn't take more than a couple of minutes.

Moreover, it can be done anytime and anywhere. 

2. Personalization

Digital payments offer a variety of payment modes.

So, brands can offer various modes of digital transaction, such as credit/debit cards, UPI, mobile wallets, internet banking, mobile banking, etc., to facilitate a smooth transaction.

Brands can analyze customer behavior, preferences, and buying patterns to personalize these options. 

3. Digital transformation

The past decade has been an era of digital transformation. 

The years between 2011 and 2020 have witnessed how digital technologies have reshaped the business world. 

The digital transformation journey is still on. 

According to the IMD World Digital Competitiveness Ranking 2023 report, the UAE was ranked 12th among 64 countries reviewed globally and 6th among 40 countries in the European and MENA group in terms of digital competitiveness.

As businesses undergo a digital transformation, digital payments become a natural part of the process. 

4. Better security and trust 

Digital payments are safe and secure.

Some of the key security measures behind digital systems include two-factor authentication, encryption, authorization, biometrics, tokenization, email validation and authentication, and secure socket layer (SSL) and transport layer security (TLS). 

This is one of the main reasons consumers today trust digital transactions and rely on it. 

How do digital payments build loyalty? 

We all will agree that building customer loyalty is paramount today for every brand, irrespective of its size and nature of business. 

Today, every brand strives to meet and exceed customer expectations, so the shift is now towards creating a seamless experience for the customer.

Digital payments powered by BaaS are at the forefront of this journey and play a crucial role in building customer loyalty. 

Let’s understand how:

1. Creating a seamless checkout experience

The checkout process is the final touchpoint between a consumer and a brand, and the ease or difficulty determines if the consumer will close the transaction.

A seamless and hassle-free checkout process can be a game-changer. As a study mentions, 88% of customers are less likely to return to a brand if they had a bad previous experience. 

So, focus on creating a seamless checkout experience to build your base of loyal customers. 

2. Frictionless experience

Frictionless experiences have become an industry benchmark in the digital landscape, and BaaS products play a pivotal role in creating a frictionless experience for the consumer. 

Integrating a BaaS layer in their product not only works as a payment gateway for the brand but also creates a frictional experience for the customer's entire checkout journey. 

By optimizing the transaction process and minimizing redirects, the entire checkout journey becomes faster and more intuitive for the customer.

Customers who value their time and prefer convenience are likely to incline towards platforms that offer frictionless experiences, making them likely to return to you for future purchases. 

Remember that a frictionless experience can be your most significant differentiator in a hyper-competitive market. 

3. Personalized experience

Digital payments can be customized based on the user preference and previous purchase behavior.

For example, if a consumer has previously used digital wallets to make a payment, brands can display the same digital wallet at the top of the payment options on the checkout page to help close the transaction faster. 

Similarly, offering loyalty rewards with their preferred digital payment options can make them feel valued and understood, which works as the foundation for building strong brand loyalty. 

The different embedded payment systems can give businesses essential insights into customer behavior, preferences, and spending habits. 

Using these data, brands can send personalized discounts, recommendations, and loyalty rewards that will help strengthen brand loyalty further. 

4. Diverse payment options

Embedded digital payment solutions are revolutionizing how businesses manage transactions. 

One of the biggest advantages of digital payments is its versatility to offer different payment modes. 

From the good old credit/debit cards to the modern digital wallets, these integrated payment options ensure businesses can meet consumers' diverse preferences. 

This flexibility to choose the preferred payment method not only improves the transaction process but also offers a great customer experience. 

And we all know how continued good customer experience helps foster loyalty in the long run. 

5. Better security 

As Statista mentions, from July 2022 to June 2023, around 38 percent of cyberattacks and network intrusions occurred in the MENA region, with the UAE in second place among the most targeted countries in the region. 

The topmost priority for the BaaS platforms is to enhance their security measures and make them a fundamental part of their services. 

Some measures the BaaS providers take include a multi-layered approach to safeguard crucial data. 

This is achieved by multi-layered encryption techniques where all transactions are encoded. 

Such strong measures not only stop cyberattacks from happening but also instill confidence and trust among brands and their customers, reinforcing the fact that digital transactions are secured. 

Foster customer loyalty with digital payments

In this digital era, businesses are revolutionizing their payment solutions with digital payments, thus reshaping the customer-business relationship. 

Businesses are streamlining their transactions by seamlessly integrating different digital payment solutions into their platforms and enhancing user experience and customer loyalty. 

You, too, can tap into the potential of digital payment systems to build loyalty. 

But this is only possible when you have the right systems in place. 

PayBy can help you get started. 

PayBy enables businesses to make cashless payments and increases their revenue with customer-first, innovative, and secure omnichannel digital payment solutions. 

You can integrate PayBy with your website to set up a payment gateway. 

PayBy also lets you enable cashless transactions, online payments via domestic and international debit and credit cards, and over 1.5 billion wallets. 

Want to enable in-app payments? 

Worry not! 

Integrate with PayBy to offer in-app payment solutions with an optimized mobile pay page and secure transaction interface.

And did we tell you that PayBy is trusted by leading brands in the UAE and licensed by The Central Bank of the UAE, which demonstrates its highest level of financial service approvals to conduct Stored Value Facility and Retail Payment Service Operations? 

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Subscription-Based Business Models

Gautham Gopakumaran
|
5 min read
February 28, 2024
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Subscriptions, Cashless Payments

Various industries have seen rapid growth in subscription-based business models over the last few years.

According to The Subscription Economy Index report, the subscription industry has grown by 435% in the past decade. And it’s expected to grow even bigger and reach a market size of $1.5 trillion by 2025. 

Seeing the data above, we can say safely that the subscription economy is here to stay. 

Be it a gym subscription, an OTT subscription, a subscription-based service, or a subscription to a SaaS tool — researchers say that eight in ten adults use some form of subscription product/ service and will continue to do so. 

But, what makes subscription business models so popular?

Subscription-based products/ services provide an affordable way for customers to access what they need. It has been proved that consumers won't mind paying for access to exclusive content/products/services. 

On the other hand, subscription commerce allows businesses to provide their services/products directly to customers, ensuring a better customer experience and a long-term relationship. 

Plus, the subscription model ensures a regular cash flow for businesses. 

However, retaining the customer long-term is not easy. While the success of the subscription business primarily depends on the continuous value added by the business, the ease of payment is equally important. 

In this article, we will discuss how subscription-based businesses can leverage digital payments to streamline recurring revenue, focusing on automation, reliability, and customer convenience.

Benefits of Digital Payments for Subscription Businesses 

From having complete control of your billing cycle and cash flow to improved customer experience through seamless transactions — there are not one but multiple benefits of digital payments for a subscription business. Let’s look at them. 

1. Improved Customer Experience

The most significant benefit of digital payment for subscription business is a seamless transaction experience for the consumers.

Digital payments make transactions faster. Consumers can set auto renewal mode with their preferred payment option to renew the subscription to the product/service. 

Consumers can even save the payment information details in a secure environment so that they don't have to enter all the details every time a transaction happens. 

They can simply set up the payment details once and enjoy the product/ service until they want to pause/cancel it. 

2. Enhanced Security Measures

Digital payments are safer than the traditional payment methods. 

With features like data encryption and fraud protection, tokenization of websites, and biometric payment methods, consumers trust digital payment methods. 

For example, PayBy, which enables business growth with cashless payments, is trusted by some of the leading brands in the UAE. 

The brand is also licensed by The Central Bank of the UAE, which helps them earn trust and a good reputation.

It has been given the highest levels of financial service approvals to conduct Stored Value Facility (SVF) and Retail Payment Services (RPS) operations. 

3. Diverse Payment Methods

Digital payment methods allow businesses to offer multiple payment methods, facilitating international transactions. 

The diverse payment methods enable customers to make cashless payments via 50+ payment modes. 

These include some of the popular customer choices like credit/debit cards, net banking, AliPay+, PayBy, Botim, and other digital wallets. 

Diverse payment options help subscription businesses reduce churn by offering various payment options for customers so that they can easily renew their subscriptions.

It also helps in global accessibility and currency support, which is essential for businesses that are operating globally. 

4. Streamlining Billing and Invoicing

Subscription businesses can automate their billing processes with digital payment methods. You can create a custom schedule to collect recurring payments from customers. 

All you need to do is set up a billing cycle of weekly, biweekly, monthly, or yearly payments for your subscription business.

With auto-debit on recurring payments, you can ensure continuous cash flow for your business. 

By leveraging digital payments, subscription business owners can create branded invoices and automate sharing via email or SMS with their recurring customers.

You can also provide customers with instant payment confirmation on recurring purchases with branded digital receipts. 

This helps build trust and reduce churn while minimizing failed transactions. 

Plus, digital payment methods empower you and the customer for a cashless transaction with a click-to-pay functionality on your invoices. 

Additionally, you can ensure further customer convenience by offering flexible payment plans, giving them full control. 

For example, you can offer options like buy now and pay later, pause payments when they don't want the subscription, change the payment mode, and so on.

5. Leveraging Subscription Management Platforms

Subscription management platforms like PayBy let you integrate payment gateways with your existing website so you can host the payment page and customize it according to your needs.  

And did you know that payment pages powered by PayBy are mobile-optimized, too?

PayBy also lets you offer customization and flexibility to your consumers. 

So, users can choose from diverse payment modes.

For example, you can enable cashless transactions and online payments via various international and domestic credit cards, debit cards, and over 1.5 billion wallets.

By leveraging subscription management platforms, subscription businesses can keep a tab of their recurring payment status on a real-time dashboard. 

Such real-time insights can help you identify inactive customers and payment failures so that you can make informed decisions to reduce customer churn. 

Improve recurring revenue with digital payments 

Payments are now an important part of the customer experience. 

Subscription businesses that rely on recurring payment, offering multiple payment options, directly address the customer's need for a seamless payment experience. 

Additionally, recurring payments help businesses to grow by ensuring continuous cash flow. 

PayBy helps subscription businesses to collect recurring payments easily. It offers everything a business needs to collect a payment on schedule. 

It gives complete control of the billing cycle and cash flow with auto debit on recurring payments. 

Get started with PayBy today.